PARISPPANY, New Jersey—The lift in hotel operating performance Wyndham Worldwide Corporation experienced during 2012 is sustainable, executives said during the company’s fourth-quarter earnings call.
And the company is pursuing “creative” avenues to keep that momentum rolling, Chairman and CEO Stephen P. Holmes said.
System wide revenue per available room grew by 4% during the fourth quarter. And looking forward to the full year 2013, Wyndham expects RevPAR to grow by between 4% and 6%, with room growth increasing by between 2% and 4%.
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Stephen P. Holmes
Wyndham Worldwide
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“While the view out the window is great, the view out the windshield is even better,” Holmes said.
As of 31 December 2012, the company’s hotel system consisted of more than 7,340 properties and 627,400 rooms. The development pipeline included approximately 930 hotels and 110,700 rooms globally.
Development and deals
Holmes said Wyndham is continually looking at ways to creatively enhance its portfolio.
During the conference call with analysts, Holmes talked of the company’s “evolving” mixed-use strategy. Referencing the 600-room Wyndham Rio Mar Beach Golf Resort & Spa in Rio Grande, Puerto Rico, Holmes said Wyndham is looking at taking control of an asset, and turning the land around it into timeshares in an effort to lower the overall cost of Wyndham’s investment.
Further, Holmes said the company is willing to leverage its timeshare business as a way to break into new markets.
As far as entering new markets is concerned, there are a couple large U.S. markets Wyndham can now check off its list.
Holmes mentioned the company’s management of the 437-room Hotel 71 in Chicago and the 203-room Alex Hotel in New York. Hotel 71 was acquired in September by Hospitality Properties Group, with Wyndham serving as the management company. And earlier this month, affiliates of Wyndham acquired the Alex Hotel.
“(The deals) get us into markets we’ve been trying to get into for a long time,” Holmes said.
Regarding Wyndham’s deal pipeline, Holmes said it remains on par with 2012. “It was pretty strong last year,” he said. “We got a couple deals done.”
As far as deal size, Holmes mentioned during the call he would be amenable to doing “tuck-in” transactions. He said these deals could range from between $20 million to $80 million.
That said, the company is still interested in a largely asset-light model.
“We’re trying to keep things asset light. We’re trying to keep the cash as long as we can,” he said. Such transactions would prove to be a more efficient use of Wyndham’s capital, Holmes added.
Holmes also said the company is searching for a third party to take some of Wyndham’s unfinished inventory off its balance sheet. The third party would then complete the project before bringing it back to Wyndham.
Looking at global deals, Holmes said the company is taking a cautious approach toward Europe, but Wyndham is still willing to chase deals on the continent.
“Europeans value their vacations … There are a lot of plusses” in Europe, he said.
